CESTAT allows Cenvat Credit on Invoices issued by Unregistered Dealer, when Actual Receipt of Goods not Disputed [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the cenvat credit on invoices issued by unregistered dealer, when actual receipt of goods not disputed.

The appellant, M/s. Marco Blowers (India) PvtLtd, is a manufacturer exporter of agricultural machinery falling under Chapter 84. They source raw materials through a registered dealer.It is the case of the department that the appellant had sourced only the cenvat able credit invoices without actual receipt of the goods and thereby contravened the various provisions of the Central Excise Act, 1944 and the Cenvat Credit Rules 2004 and availed the said Cenvat Credit not due on the strength of the eight invoices issued by the registered dealer.

The appellants contend that they place orders for supply of goods on the unregistered dealer (trader), who in turn negotiates with the registered dealer to supply the said goods to the appellants. The impugned goods were supplied to them directly by the registered dealer at their factory premises under cover of dealer’s invoice making a mention of the name of the buyers (unregistered dealer) and indicating the appellants as consignee in the invoices issued.

The appellant contended that it is an admitted position that the goods so received via unregistered dealers were supplied directly at the appellant’s site and therefore they state that the credit availed by them on the strength of the invoices of the registered dealer has been rightly availed.

The contention of the Department is that the dealer only to promote the business of the impugned buyer/consignee, unlawfully benefited the consignee by issuing cenvatable invoices without supplying any material. As the appellants have not purchased the impugned goods from the dealer, so they are not entitled to availment of credit based on the invoices issued by the dealer.

The Tribunal of Rajeev Tandon, Technical Member relied on the judgment in Apollo MetalexPVt. Ltd. V. CCE & ST Noida, the Tribunal held that it was not correct to disallow credit on the strength of invoices issued by unregistered dealer (intermediate supplier), when actual receipt of goods was not disputed.

The Bench concluded by noting that there is nothing to disentitle the availment of Cenvat Credit when such facility is clearly envisaged in law and the intention of the government so to do also spelled out by way of circular to promote/facilitate ease of doing business, and the elaborate circumstantial evidence indicating the receipt of the goods.

To Read the full text of the Order CLICK HERE

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